Sino-US business relations key to global recovery

By: | at 08:00 PM | Channel(s): International Trade  

For both the US and China economic recovery begins at home. Stimulus packages in both nations are considered keys to pulling the global economy out of recession. In 2010 Shanghai will host the World Expo. For global businesses the Expo is like combining the Olympics with the World Cup. Will the Expo signal a rise out of recession?By George Lauriat, Editor-in-Chief, AJOTPerhaps more than any other Chinese city Shanghai owes its prosperity to the export-oriented boom of the 1990s. The city is a living symbol of change in China, not only for the outside world but also for the Chinese themselves. The transformation is all around with new high-rise buildings, one of the world’s largest ports and airport that is expanding. The region is China’s financial center and the heart of the heavily industrialized Yangtze River Delta (YRZ) economic zone. The YRZ is like a medium sized country within a country posting a collective GDP (2007) of Yuan 4.66 trillion ($6.82 billion) – by comparison that is larger than Poland’s GDP. For all these reasons, the impact of the global economic slump on the Shanghai region could potentially be devastating, not only to Shanghai but the Chinese economy as a whole. But the China’ stimulus package ($586 billion) has seemingly stemmed the red tide and while the numbers for growth aren’t double digit, China’s National Bureau of Statistics (NBS) in a July release reported that the nation’s GDP grew 7.1% in the first half (6.1 in 1stquarter and 7.9 in 2nd quarter) and was on target for 8% for the year. Besides the GDP moving upward, the NBS reported an increase in industrial output of 10.8% from a year earlier, the third monthly increase in the growth rate. Additionally, retail sales climbed 15.2%, a key figure to US observers. [The US has long suggested that the Chinese consumers save less and spend more while the Chinese economists have long suggested the US consumers save more and spend less.] Steel production also rose 19.4% with increased borrowings being funneled into in factories and other fixed assets also rose.
Shanghai’s results were a little lower and perhaps better reflect the global impact on the economy. Shanghai reported a GDP of 661.2 billion Yuan ($96.79 billion) in the first half of this year, up 5.6% year-on-year. It’s Shanghai’s lowest GDP growth rate since 1992, but doesn’t nearly fully reflect what’s on the table.
In 2010 Shanghai will be hosting the World Expo exhibition May 1st to October 31st. The exhibition is held every five years in a different international city and showcases global business and technology like no other venue. Shanghai is already in the midst of a $53 million makeover, which is more than was spent on the Beijing Olympics. The investment is to prepare Shanghai for the 70 million visitors expected to attend the World Expo. The city is sinking a reported $836 million in the historic Bund district. Among the projects being pursued is the sinking of several roads below street level to improve traffic flows and create better streets in the district.
The actual World Expo site is a 5.28 sq km area on the banks of the Huangpu River. The site formerly was the home to heavy industry ranging from shipbuilders, steel produces and coal & oil facilities. The centerpiece of Expo is the $200 million China Pavilion, a 160,000sq/m saucer shaped performance arena.
Construction, like that of the Bund, expansion of the airport, new roads, rail and pipes will have a positive effect on Shanghai’s infrastructure for decades to come. Equally, the chance to host 10 million foreign businessmen will reinforce Shanghai’s position as the financial center of China. Among the 10 million, Shanghai expects to see a strong contingent from the US.
On July 17th the US broke ground on the site of its USA Pavilion (USAP). US participation in the event was never a sure thing as raising the $61 million needed to build and operate the Pavilion has been difficult with the recession. A 1991 law states that funding

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American Journal of Transportation